Despite some research having addressed farmer identity and particularly how structural or environmental changes are reflected in the ways farmers construct their identities, the role institutions play in shaping farmer identities remains largely ignored. This paper investigates how two contrasting identities, that of a producer–farmer and an entrepreneur–farmer, are constructed by drawing on an institutional framework. The context of the study is Europe, where the structural, technological, and institutional changes in the farming sector are visible. Drawing on these visible changes enables the study to enhance understanding of the multiple, complementary, and sometimes even contradictory findings of earlier studies on farmer identities. Our results suggest that the informal institutional environment and social norms contribute to the sources of legitimacy sought out by farmers. The producer–farmer constructs the identity to achieve profitability within the boundaries of the accepted ways of operating a farm. In this case the legitimacy sought reflects the predominant norms and values in the local community. In contrast, the entrepreneur–farmer actively seeks to become the biggest and best, regardless of social norms and the institutional environment. Hence, the available identities are determined by whether the farmer accommodates or challenges existing institutions and particularly their norms. The entrepreneur–farmer needs not only to be entrepreneurial, but to act as a change agent vis-à-vis the norms, while the producer–farmer focuses on adhering to the prevailing norms.